The only thing we can be sure of is that it's a ripping yarn. Rumours that Soviet nuclear experts had produced a mysterious explosive material with unimaginable destructive power first circulated in the 1970s, and despite several official investigations and subsequent denials the story refuses to die. The near-mythical compound cropped up again on Sunday, when the News of the World claimed it had foiled a terrorist plot to buy red mercury as material for a dirty bomb.

Depending on who you believe, red mercury is either an elaborate hoax, a codename for nuclear material smuggled through the former iron curtain, or a terrifying new trigger for a handheld hydrogen bomb. What it isn't, according to the speculation and hearsay that makes up the scientific literature on the subject, is any use for a dirty bomb (one that scatters radioactive material).

"Nobody would dream of getting that stuff for a dirty bomb," says Frank Barnaby, a nuclear physicist who worked at the Atomic Weapons Establishment at Aldermaston in the 1950s. "For a terrorist it would offer no significant advantages over an ordinary high explosive or, if they wanted a dirty bomb, a radioactive source. To go to the trouble of spending huge amounts of money on red mercury makes no sense at all."

Particularly so if all you get for the News of the World's reported price of £300,000 a kilo is mercury dyed red with nail varnish, which, according to a 1994 investigation by the Russian prosecutor-general's office, is what was in the "red mercury" sold by Russian conmen throughout Europe and the Middle East after the collapse of the Soviet Union.

Others, including Sam Cohen, the inventor of the neutron bomb, disagree, and Barnaby says there is evidence that the Soviets churned out vast quantities of mercury antimony oxide, the intermediate - and equally elusive - compound from which red mercury is supposedly produced by placing it inside a nuclear reactor. "There's no doubt that they made a large amount of that stuff. I've talked to chemists who have analysed it in East Germany," he says. "But what they did with it is a mystery."

Some say the intermediate compound can multiply the yield of explosions and that it was used inside conventional Soviet nuclear weapons or as a rocket fuel additive. Others say the compound was irradi ated in the core of nuclear reactors to produce pure red mercury, capable of exploding with enough heat and pressure to act as a trigger inside a briefcase-sized fusion bomb.

The International Atomic Energy Authority in Vienna takes a different view. "Red mercury doesn't exist," a spokesman says. "The whole thing is a bunch of malarkey."